Temperature and industrial output: Firm-level evidence from China

Xiaoguang Chen and Lu Yang

Journal of Environmental Economics and Management, 2019, vol. 95, issue C, 257-274

Abstract: We pair a firm-level panel of annual industrial output with a fine-scale daily weather data set, to estimate the responses of industrial output to temperature changes in China. We have four primary findings. First, industrial output is nonlinear in temperature changes. With seasonal average temperatures as temperature variables, output responds positively to higher spring temperatures and negatively to elevated summer temperatures. With temperature bins as temperature variables, output increases linearly with temperature up to 21–24°C, and then declines sharply at higher temperatures. Second, lagged temperature changes exert large and significant impacts on current year’s output. Third, higher summer temperatures have larger detrimental effects on output in low-temperature regions than in high-temperature regions, which suggests that adaptation to warming may have been actively undertaken in high-temperature regions in China. Lastly, industrial output in China is projected to decrease by 3–36% by 2080 under the slowest warming scenario (B1) and by 12–46% under the most rapid warming scenario (A2) under the global climate models UKMO-HadCM3 and PCM.

Keywords: Temperature; Industrial output; Adaptation; China (search for similar items in EconPapers)
JEL-codes: D24 O14 O44 Q51 Q54 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (84)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:95:y:2019:i:c:p:257-274

DOI: 10.1016/j.jeem.2017.07.009

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